io6 AGRICULTURAL INDEBTEDNESS 



interest in his holding, the peasant's credit is small. 

 He can raise money only against the expectation of 

 the next harvest, upon his cattle, and upon his wife's 

 jewellery or household utensils. His capacity for in- 

 debtedness is extremely limited, and he is not, there- 

 fore, very deeply involved. But the action of British 

 law-courts has been to invest the proprietor of land 

 with an asset, the value of which has been steadily 

 increasing, and against which the peasant proprietor 

 soon discovered that he could raise large sums of 

 money. It is extremely probable, therefore, that his 

 indebtedness has increased pari passu with the value 

 of his property. 



The evidence that the indebtedness of the cultivator 

 is increasing may not be irrefutable, but it certainly 

 has the colour of strong probability. Unfortunately 

 there is not even as much evidence to show that the 

 rate of interest charged by the money-lender is going 

 down. A well-to-do man who is not already in the 

 grasp of the money-lender can negotiate a loan upon 

 good landed security at 8 per cent, to 12 per cent., but 

 the tenant who has nothing to pledge but his cattle or 

 the prospects of the next harvest has still to pay 

 usurious interest, 37^ per annum not being at all un- 

 common. This high rate of interest is all the more 

 pitiful because there are in India considerable savings 

 waiting investment for which their owners hardly 

 succeed in getting more interest than is commonly the 

 case in Europe. As long ago as 1891 the late Mr. 

 Justice Ranade said at Poona to the Industrial Con- 

 ference : ' No fact in the economic condition of this 

 country arrests attention more forcibly than the con- 

 trast presented by the hoards of unused capital, stored 

 up in the vaults of the Presidency and other exchange 

 banks, and the high premium Government securities 

 command on one side, and on the other the utter 

 paralysis of industry in rural India, due to the poverty 

 of the resources of the classes engaged in the produc- 



